Financial Repression: Coming Soon to a Market Near You

It’s not inflation you have to worry about:

It is conjectured here that the pressing needs of governments to reduce debt rollover risks and curb rising interest expenditures in light of the substantial debt overhang (combined with the widespread “official aversion” to explicit restructuring) are leading to a revival of financial repression—including more directed lending to government by captive domestic audiences (such as pension funds), explicit or implicit caps on interest rates, and tighter regulation on cross-border capital movements.

posted on 10 September 2011 by skirchner in Economics, Financial Markets

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